The present paper offers an analysis of the effects of various government welfare programs on the low-income level of men and women. The paper offers a gender-based analysis of the effects of these programs on the low-income levels of men and women in Canada between 2000 and 2016. The paper further addresses the difference in the prevalence of low-income among men and women using age. The paper looks at how government welfare programs such as the Quebec Pension Plan (QPP) and Canada Pension Plan (CPP) and the Guaranteed Income Supplement (GIS) and Old Age Security (OAS) affect the rates of low-income among men and women. The analysis showed that government transfers have significant effects on the rates of low-income and helped solve the gap in the rates among men and women.

Chapter One

The Impact of Social Welfare Policies on Poverty Levels

Introduction

Poverty is a global phenomenon with varying rates among nations. The rates are high in developing nations and some developed nations. Poverty can be described as social and material deprivation of many basic needs of life. The advancements and changes in social life have resulted in significant changes in social needs that come with a variety of problems for many societies. This implies that representation of poverty from a social and material perspective might be inaccurate, especially in developed countries such as Canada, where poverty is described in terms of relative rather than absolute poverty. Poverty in either relative or absolute affects the lives of individuals in many societies in different ways. As a result, governments and Non-Governmental Organizations attempt to mitigate poverty by creating social policies that aim to alleviate the life of poor people in societies. However, it is not clear how effective these social policies are in achieving their mandate of alleviating the lives of the affected population. Assessing the effectiveness of specific welfare policies on poverty can shade more light on the effectiveness of the policies in achieving their mandate.

The social policy outlines an inclusive discipline that aims to offer solutions that can address social life problems. These policies change as the environmental and economic factors change in different societies, coupled with changes in the state policies and social structure. According to Raphael, Morris, Toba, and Ryan (2019), high levels of poverty in Canada are a result of inadequate welfare policies, misplaced government priorities, and the unwillingness of the neo-liberal government to interfere in the operations of the market economy, which results in exclusion, exploitation, inequality, and domination by corporates and businesses at the expense of the poor. Therefore, social welfare policies have a significant effect on the income levels of societies. Assessing the impacts of social welfare policies on poverty levels can highlight the significance of the policies and help answer the question of whether the welfare policies and programs are solving the intended problem effectively.

Low-income rates have had different effects on various individuals within societies, but women have had high low-income rates compared to men (Harding, 2018). However, the gap has been decreasing over time, with 13.8% of women and girls compared to 12.2% of men and boys falling below the low-income line in 2016, signifying a difference of 1,6% compared to 3.1% in 1976 (Harding, 2018). Lahey (2010) attributes this difference to demographic characteristics such as living arrangements, marital status, race, age, employment status, and education level. This raises a pressing issue in the analysis of the effects of welfare policies on the poverty levels of different vulnerable groups in Canada.

Taxes and transfers offered by the Federal government have been found to have a redistributive effect that can reduce inequality between men and women and reduce low-income rates among different demographic groups (Moyser, 2017). People interact with tax-and-transfer systems through goods and services tax, paying personal income tax, among other taxes, and through receiving transfers. According to Harding (2018), one of the primary goals of the tax-and-transfer system is to redistribute income from high-income earners to low-income earners, which is achieved through different government transfer programs such as cash transfers, tax credits, and non-cash programs such as subsidized housing. Previous studies have found a decrease of nearly 50% in low-income rates from transfer and taxes in different developed countries (Harding, 2018). Heisz and Murphy (2016) noted that individual transfer programs such as the Guaranteed Income Supplement (GIS) and Old Age Security, Canada Pension Plan (CPP), child benefits, Quebec Pension Plan, and Employment Insurance (EI), affect income inequality and low-income rates differently over time and in various magnitudes. This implies that different social welfare programs have different effects on the poverty levels of different groups within the community.

Similarly, this implies that different transfer programs affect different family types since older families might receive CPP and OAS payments, while younger families are likely to receive Employment Insurance or Child benefits. Fox and Moyser (2018) noted that the effects of transfers on seniors are essential in reducing their low-income rates (Fox & Moyser, 2018). Therefore, the examination of the effects of social welfare policies and programs by family type also allows for an analysis of poverty (low-income).

Canada has a wide range of welfare programs referred to as federal transfer programs. Government transfers include Guaranteed Income Supplement (GIS) and Old Age Security (OAS), Quebec Pension Plan (QPP) and Canada Pension Plan (CPP), social assistance benefits, child benefits, the Working Income Tax Benefit (WITB), Employment Insurance (EI), and the Harmonized Sales Tax (HST) / Goods and Services Tax (GST) credit. These programs have varied effects on the targeted population and their economic conditions (Harding, 2018). The GIS and OAS and QPP and CPP transfer programs are the biggest with regards to total benefits allocated to the population (Harding, 2018). GIS/OAS transfer received a total of $48.2 billion, while the QPP/CPP programs received a total of 42.5 billion in 2016/17. Child benefits received $22.1 billion, while Employment Insurance received a total of $20.7 billion, which was a $4 billion increase in child benefits compared to the previous period, which is attributed to the adoption of the new Canada Child Benefit program (Department of Finance Canada, 2017a). The Canada Revenue Agency (2017c) noted that the Harmonized Sales Tax (HST) and Goods and Service Tax (GST) received a total of $4.3 billion worth of credit. WITB received a total of $1.1 billion in 2016/17. Social assistance programs, which are administered provinces, received a total of $13.3 billion. The Department of Finance Canada (2018) noted that social assistance funds are used to fund social services, social assistance, child development and care, and post-secondary education.

The present paper offers an analysis of the effects of welfare programs on low-income couples with the compassion of the effect on men and women. It is essential for studies assessing the distribution of income to examine income at the family level. This is based on the assumption that financial resources are shared within families; therefore, offering a gender-based analysis can shade more light on the effects of welfare programs on low-income levels of different groups. The present paper aims to offer the difference in rates of low-income among males and females of all ages. The paper describes the group receiving benefits and how they are affected by the availability and lack of welfare programs. The government programs included in this analysis are Guaranteed Income Supplement (GIS) and Old Age Security (OAS).

Chapter Two

Literature Review

There is mixed and limited information regarding the effects of welfare programs on the outcomes of low-income. The trends in these outcomes have generated speculations and discussions regarding the effects of welfare reforms on low-income. Besides, literature offers little or no guidance on how certain welfare reform affects poverty and deep poverty. Some states have hypothesized that specific welfare reform policies have increased poverty, such as the Family cap in the United States, while others argue that the reforms have reduced poverty, such as the increases in the earned income disregard (McKernan & Ratcliffe, 2007). This implies that on average, one can get an overall effect of zero of social policy, when, in fact, individual policies have had a significant effect on the economic well-being of families.

The lowest income population is the most concerned about social welfare reforms. Ideally, the welfare system exists to aid low-income families and individuals to raise incomes to avoid the negative consequences of poverty. In this regard, the evolution effects of welfare policies should assess the impacts of welfare reforms on the low-income population. Social welfare policies can be traced back to the industrial revolution period, which was a period of economic revolution and, at the same time, a period of intense social problems (Aravacik, 2018). According to Hay (2009), the Canadian federal poverty policy of 2009 is consistent with the understanding formed 40 years ago, which does not confer to the current societal situation. In this regard, Hay (2009) noted that it is worth reviewing the Canadian approach to social welfare policy and its effect on poverty policy.

Canada is among the wealthiest nations in the world, and the common assumption would be that poverty is non-existent or be at the barest minimum of the population (Duru, 2018). Ideally, one of the objectives of the millennial goals, as stipulated by the United Nations at the 2000 summit, was to reduce hunger and eradicate extreme poverty. The United Nations outlined that this objective was to be achieved in stages but stated that the population living in poverty should be reduced by 50 percent by 2015 (Duru, 2018). Canada had already identified and acknowledged the enormity and prevalence of poverty in 1989 and adopted a plan to eliminate it by 2000 (Duru, 2018). However, both the UN and Canada did not achieve their targets.

Definition of Poverty and Measurement

The definition of poverty and its measures needs an understanding of what poverty means and how it is measured. However, it is essential to know that there is no official definition of poverty by the government, but Statistics Canada defines low income as “living in strained circumstances” (2008). Statistics Canada has three measures that determine poverty: The Market Basket Measure (MBM), the Low-Income Cut-offs (LICOs), and the Low-income measure (LIM). Each of the outlined measures has its application and contribute to different ways of understanding poverty in Canada. However, there is a lack of national consensus on the definition of low income and income adequacy among the poverty policy community. Hay (2009) noted that the definitions of income adequacy are only implied from the selected poverty measures proportional to the average household spending on clothing, food, and shelter (LICOs), cost of essential goods and services (MBMs), and to the median household income (LIMs). It is also essential to note poverty measures in Canada and around the globe, are subject to prevailing levels of income and consumption, coupled with the cost of services and goods. This implies that changes in this aspect of society should coincide with policy changes that aim to address poverty problems.

Statistics Canada index the Low-Income Cut-Offs annually to the consumer price index. The Low-Income Cut-Offs were adjusted after every six to eight years since 1992 to reflect the changes in household spending patterns on clothing, food, and shelter. The spending on the three listed items declined over the period. However, Mitchell and Shillington (2008) pointed out that without the adjustments to reflect the spending fluctuations, the poverty rates would appear to be lower. As a result, Mitchell and Shillington (2008) noted that the recent trend of lower poverty rates based on Low-Income Cut-Offs could be a result (in part) of the lack of adjustment to the Low-Income Cut-Offs in recent years. In this regard, Shillington (2008) pointed out that the frequent adjustment of Low-Income Cut-Offs could increase the poverty levels of Canada. Therefore, and assessment of current and previous poverty policies can help demonstrate the actual position of the country with regards to poverty levels and the impacts of new and previous social welfare policies on poverty.

Poverty Trends in Canada

Poverty rates data are important as they aid in understanding the complex reality of poverty. Poverty involves political, social, and cultural marginalization that has effects on spiritual vitality, self-worth, and well-being of communities (Citizens for Public Justice, 2018). The Report by the Citizens for Public Justice (2018) outlined that most adults living in poverty in Canada are employed. The report further outlined that individuals facing multiple barriers often have limited policy support and overlooked, though they experience high poverty rates. Fifty-one percent of people living in poverty are among the Canadian workforce, with 37 percent being low-income families with at least 910 hours of working annually. The persistent state of precarious employment (employment without benefits and other protections) leaves working adults at further risk of poverty.

The Citizens for Public Justice report outlined that Low Employment Insurance eligibility and benefits, inadequate territorial and provincial social assistance benefits, and insufficient Working Income Tax Benefits represent significant gaps in the available social policy support (Citizens for Public Justice, 2018). Twenty-three percent of people with disabilities live in poverty (Citizens for Public Justice, 2018). Katherine Wall (2017) pointed out that lone parents with a disability and people aged 45 to 64 with a disability account for nearly one-quarter of the low-income population, and both groups accounted for only 3 percent of the non-low-income population. The report by the Citizens for Public Justice outlined that 80 percent of single-parents families are often female-led, and among these households, racialized women, indigenous women, and women with disabilities have high rates of poverty. Besides, indigenous people continue to experience the impacts of cultural genocide and colonization, with 23.6 percent of indigenous people living in poverty (Truth and Reconciliation Commission of Canada, 2015). Refugees and claimants have few social support when they arrive in Canada. As a result, 31.4 percent of refugees and immigrants live in poverty (Citizens for Public Justice, 2018). Access to safe and affordable housing remains a barrier to claimants and refugees, leading to increased homelessness and poverty. Therefore, poverty is a persistent problem in Canada among different family types and in communities across all the communities.

Effects of Welfare Policy on Poverty

The literature on the effect of social welfare policies on poverty is scarce and inconclusive. Many studies on the impact of welfare policies on poverty examined the effect of specific programs such as welfare waivers but not the role of specific welfare policies. However, McKernan and Ratcliffe (2006) noted that a few studies that measured specific policies did not utilize a comprehensive set of policies, nor did they examine poverty as the outcome. This limits the available literature that examines the impact of specific welfare policies on poverty. Borjas (2015) pointed out that the relationship between poverty and welfare is difficult to measure due to the built-in spurious correlation that prevents researchers from drawing credible inferences. Ideally, Borjas (2015) noted that the families that are likely to be poor are also likely to qualify and participate in welfare programs. As a result, Borjas (2015) pointed out that the effect of welfare on poverty can be identified through a controlled experiment where the government provides aid to some families and denies to others to serve as the control group. However, such an idealized experiment does not exist and is challenging to perform.

The European Union has experienced some significant changes in social policy, which reflects a belief that economic success has a close relationship with social policies. This implies that there is an agreement among policymakers that the government is an essential part of the economic production process either as subsidizers, employers, or legislators, especially in distributing resources and analyzing well-being. Evidence shows that economic growth is influenced by finance, public goods, demographic parameters, social norms, and income distribution (Hay, 2009). The private market is inefficient in ensuring the adequate distribution of resources among the people leaving the government with an important role in establishing and implementing policies and programs with redistributive and social minimum goals. Social policy as a productive factor implies interdependence between employment, macro-economic, and social policies. As a result, the focus has been on active social policies that aim to reduce potential adverse effects of social protection on economic growth.

According to Hay (2019), policy activist who believes that social protection has a significant effect on the economy argue that spending on social policy is a good investment in the society and knowledge-based economy since it is a contributor to progress and economic efficiency. Policy activists argue that failure to spend on social policies enhances the risk of establishing persistent inequalities that can result in economical cost due to foregone tax revenue, lost productivity, higher expenditure on programs such as health care, income assistance, security, and social services (Hay, 2009). As a result, Jenson (2004) pointed out that non-social policy has a potential social cost that can lead to social instability. On the other hand, Rice and Prince (2006) argue that policy-making that attempts to achieve equity, efficiency, and affordability simultaneously is made by a policy-making approach that is considered fiscalization of social policy. This implies that economic stability and progress have a close relationship with the welfare of society, which has a close relationship with social policy. Therefore, social policies play a significant role in establishing stable societies through the provision of necessities to the poor and poorly paid individuals in society.

Social policies can aid in the mitigation of poverty. According to McKernan and Ratcliffe (2006), variations in welfare policies over time and across states can facilitate the measurement of the relationship between poverty and policy. Most of the research on policy and poverty has examined the impact of federal and state policy reforms on employment, welfare caseloads, income, earnings, poverty status, and other outcomes (McKernan & Ratcliffe, 2006). Most of the literature examining these relationships outlined that welfare reforms play a significant role in reducing caseloads. Similarly, some literature suggests that welfare reforms resulted in additional employment opportunities, earning, and, eventually, income. However, more limited literature on the impact of welfare on poverty found mixed results. For instance, Bloom and Michalopoulos (2001) noted that some experimental evaluations done by MDRC show that welfare programs that incorporate mandatory employment services often left out families that are not better off financially and would not have been without the program. On the other hand, an analysis by Weber, Edwards, and Duncan (2003) found that changes in welfare policies during the 1990s had no significant impact on the poverty of single mothers, though they observed some significant differences in rural/urban areas. Similarly, Gundersen and Ziliak (2004) found no significant effect on welfare waivers on the poverty rates on female-headed families.

The application of simple of the neoclassical model of a labor-leisure option indicates an ambiguous relationship between poverty and welfare (Borjas, 2015). Borjas conducted a study and presented the findings using two panels to illustrate the predicted effect of generic welfare programs on family income. The family faces budget line FE in the labor market and selects consumption basket at point P in each panel. The findings show that the welfare program generates new opportunities set that is bounded by a budget line that flattens in the labor market because welfare benefits drop significantly as the families accumulate labor earnings.

Family income Welfare increases family income Hours of leisure

Family Income

Welfare reduces family income.

Hours of leisure

“The move from P to R can be decomposed into an income effect (P to Q) and a substitution effect (Q to R). Both the income and substitution effects imply that the welfare program induces a reduction in family labor supply (assuming leisure is a normal good). Note, however, that this behavioral response has an ambiguous effect on family income: The substitution effect reduces family income, while the income effect increases it. As a result, family income rises from I0 to I1 in the top panel of the figure but falls in the bottom panel” (Borjas, 2015, p.145).

The relationship demonstrated by Borjas (2015) suggests that family income is likely to reduce when compensated labor supply responds to implicit laxation of labor earning, but welfare programs can increase measured poverty rates if the substitution effect is relatively significant. As a result, Borjas (2015) demonstrates that there is a robust circumstantial relationship that supports the premise welfare policies in the form of public assistance does not reduce poverty rates due to a strong substitution effect. On the contrary, Gundersen and Ziliak (2004) pointed out that a strong macroeconomy at both national and state levels reduces both the poverty rates among families and the severity of poverty. Similarly, Gundersen and Ziliak (2004) pointed out that policies that facilitate long-run economic growth are effective anti-poverty tools and that policies that specifically target low-income populations are useful for policy reduction. These findings demonstrate the complexity of the relationship between poverty and welfare policies due to various interrelated factors that hinder a comprehensive assessment of this relationship.

Nonetheless, the literature on the effects of welfare policies on low-income or poverty are scarce and outline various issues. Some suggest a positive relationship between welfare programs and poverty, while others provide a negative relationship between welfare programs and poverty levels.

Chapter Three

Data and Methodology

This paper uses data from the Survey of Labour and Income Dynamics (SLDI), Survey of Consumer Finances (SCF), and the Canadian Income Survey (CIS). SLDI was a longitudinal survey that followed the same individuals each year. SCF was a cross-sectional survey, which surveyed different individual each year, and the CIS was also a cross-sectional survey. The present paper uses data from these surveys to offer a cross-sectional analysis of the effects of government transfer on low-income levels over time. However, this method has limitations such as it cannot analyze the effect of a government program on an individual over time, and it is not possible to know if a transfer in one year affected the levels of low-income in subsequent years (Harding, 2018). These surveys selected samples from all individuals in Canada except residents of institutions, residents of Territories, individuals living in Aboriginal settlements and reserves, members of the Canadian Forces living in military camps.

Measures of Low-Income

Statistics Canada outlined three measures of low-income. These measures establish a threshold income level that is used to determine the income status of a family or an economical family. These measures are:

The Low-Income cut-offs (LICO), this was developed using the 1992 Family Expenditure Survey (FAMEX), and it is aimed to define the line under which family spends much of their income on shelter, food, and clothing than the average family.
The Low-income measure (LIM), this compares family income with the median income of the country, and it is purely income-based.
The Market Basket Measure (MBM), is based on the minimum income needed to purchase a basket of services and goods that represent a standard of living needed for a family to participate in their community (Harding, 2018).

The present paper uses the definition of low income based on the Low-income measure after tax (LIM-AT). Harding (2018) noted that the low-income measure after-tax is superior to other methods as it offers a contemporary standard for low-income rate because it is based on the median income of the current year, while the other two are based on expenditure patterns and basket of goods tailored to the year in which it was based. Moreover, the LIM-AT offers a single standard for comparison across populations and years within the country, which can be a benefit and disadvantage at the same time because it does not incorporate the cost of living, community size, or region but it offers one standard of living that can be compared for the entire country.

The percentage of Canadians in low income varies by the low-income line, as shown in the table below. Notably, the LIM-AT approach yields a higher low-income rate compared to other measures. Besides, all measures show that the gap in low-income between men and women is significant, but the difference between the three measures is small.

Table 1: Low-income rates by sex in 2016 for various low-income measures

	Low-income measure after tax (LIM-AT)		Low-income cut-off, after-tax (LICO-AT), 1992 base		Market Basket Measure (MBM), 2011base
Low-income rate (%)
Female		13.8		8.5		10.8
Male		12.2		7.7		10.3

Source: Statistics Canada. Low Income by age, sex, and economical family type

The Low-income measure, after-tax (LIM-AT)

The definition of low-income in the present paper is based on the low-income measure, after-tax (LIM-AT). The LIM-AT in this paper is calculated at the household level, which implies that if the total after-tax income of a household is below the low-income measure, after-tax threshold, all people in that household are considered to be in low income. The LIM-AT accounts for the size of the household, and it also adjusts to incorporate the fact that large households require more resources and that each additional person does not need the same amount of resources as the last. Harding (2018) pointed out that the LIM-AT threshold for a single person is defined as 50% of the Canadian median adjusted household after-tax income. The LIM-AT for household compromising more than one person is achieved by multiplying by the adjustment factor.

Table 2: Low-Income measure, after-tax (LIM-AT) threshold by the size of the household in 2016

Household size	Low-Income measure, after-tax
	Dollars
1	22,657
2	32,042
3	39,243
4	45,314

Source: Statistics Canada. Low-Income measures (LIMs) by income source and household size

The low-income measure is recalculated each year based on the current median adjusted household income. However, the threshold for falling under the low-income category, based on LIM, has increased over time since the median income has also increased over time. As a result, LIM reflects the current living standards of Canada.

Nonetheless, it is essential to note that the household analysis of LIM-AT has both limitations and benefits. For instance, a household refers to one person or a group of people living in a dwelling (related or not). When the household is made of a family, couple, or any other group that shares resources, it makes sense to measure low income at a threshold level. For instance, in a family made of a child and two parents, one parent may be the primary caregiver and may not have an income or have low income, but it would not generally be logical to say that the primary caregiver is in low income if the providing parent receives a high salary.

Calculating the Effect of Welfare Programs on Low-income Level

The present paper assesses the effects of welfare programs on low-income by calculating the household income without a specific program, then determine, based on this income, whether the individual will be in low income or not. The hypothetical low-income rate is compared to the low-income rate. The analysis entails the subtraction of the value of the welfare program from the household after-tax income. Then if the new hypothetical income is below the LIM-At threshold, the household would be concluded to be in low income, and all individuals in the household are in low income. However, it is essential to note that the methodology does not incorporate the behavioral effects such as the changes in the social or market decisions in response to the welfare programs. Previous studies that used this method outlined some methodological limitations, such as overestimation of the effects of welfare programs on low-income levels when taking into account the behavioral effects (Kim, 2000). Picot and Myles (2005), on their study on seniors, found that behavioral effects overwhelmed the direct effects measured in such analysis. Ideally, they found that if seniors did not have a public pension to rely on, they would save more by working more during their working years, which would partially offset the income they did not receive from the pensions. In this regard, Picot and Myles found that extent of behavioral effects on the low-income level was small among working-age adults and their children (Picot & Myles, 2005). On the contrary, Moffit and Scholz (2011) noted that the overall magnitude of behavioral effects on low income was quite minimal for American Social Insurance programs, including old age security benefits.

Another limitation of the present method is that it does not incorporate simulation of a tax-and-transfer model. This implies that the same low-income threshold is used to calculate the low-income rate with or without a transfer (welfare program). Notably, this method does not recalculate the low-income threshold based on the new, lower, median income when calculating the low-income level of individuals without any transfer program. Moreover, (assuming there are no changes in income taxes) since people will have lower-incomes, many would-be indifferent income tax brackets and would ideally pay less tax, something the method does not consider during the calculation. Despite the outlined limitations the methodology utilized in the present analysis is an essential accounting approach to approximate the significance of government welfare programs, and for comparing the outcomes of men and women coupled with different demographic groups. Besides, Harding (2018) noted that the present methodology is essential in understanding the intended person for each welfare program.

Statistical Significance of the Findings

The data used in the present paper was weighted to ensure the representation of the entire Canadian population. Statistical significance tests analyzed the sample size and weights to determine sampling errors and find out whether the data is likely to represent the real population correctly. The bootstrap hypothesis testing was used to ascertain whether the difference between percentages for men and women was statistically significant. A star is placed beside the percentages for men if there is statistical significance in the difference of the value between men and women at a 95% confidence level.

Chapter Four

Results and Discussion

The Effects of Government Transfers on Low-Income Rates

Data shows that the low-income rate was higher in women compared to men in the study period (1995-2016). The rate for women slightly decreased from 13.9 % in 2000 to 13.8% in 2016. On the other hand, the rate for men increased from 11.7% in 1995 to 12.2% in 2016.

Chart 1: Low-income Rates of people by sex and with and without Transfer 2000 to 2016

Table 3: Low-income Rates of people by sex and with and without Transfer 2000 to 2016 (data for chart 1)

	Female		Male
	With Transfer	Without transfer	With transfer	Without transfer
	Percent
2000	13.9	29.1	11.7 *	24.9*
2001	13.5	29.2	11.4*	25.0*
2002	13.8	29.4	12.0*	25.6*
2003	14.1	29.3	12.4*	25.7*
2004	14.2	29.7	12.6*	25.7*
2005	13.8	28.8	12.1*	25.3*
2006	14.3	29.6	12.5*	25.4*
2007	14.0	28.8	12.5*	25.3*
2008	14.4	28.9	12.4*	24.5*
2009	14.4	29.8	13.0*	26.4*
2010	14.3	30.4	12.7*	26.8*
2011	14.0	29.1	12.6*	25.9*
2012	14.5	29.9	12.8*	26.6*
2013	14.0	29.9	12.8*	26.7*
2014	13.5	27.9	12.5*	25.1*
2015	14.7	29.9	13.7*	27.0*
2016	13.8	30.2	12.2*	26.4*

Source: Statistics Canada, a combination of the Survey of Consumer Finances (SCF) and the Survey of Labour and Income Dynamics (SLID) from 1995 to 1997, the SLID from 1998 to 2011, and the Canadian Income Survey (CIS) from 2012 to 2016.

A range of various government transfers has helped Canadians over time, as shown in the chart above. The chart shows that various welfare programs or government transfers have reduced the rate of low-income of both men and women, although the effects have decreased over time. The rate of low-income for women would have been 29.1% without the use of government welfare programs versus 13.9% with the use of government welfare programs, which yields a difference of 15.2 percentage points in 2000. Similarly, in 2016 the rate of low income for women would have been 30.2% without the intervention of transfers, but with the transfer, the rate dropped to 13.8%, a difference of 16.4 percent point. Government transfers have also reduced the gap in the low-income rate between men and women. The difference in low-income rates with transfers was 1.6% in 2016, and without government transfers, the difference would have been 3.8%. The difference in low-income rates between men and women with and without transfers is statistically significant for all years from 2000 to 2016.

Effects of Government Transfers on Low-income rate by Age

Low-income rates vary based on demographic characteristics such as age, employment status, and education. Ideally, people with different socio-demographic characteristics may receive a lesser or greater amount of government transfers. Age is one of the critical socio-demographic determinants of government transfers. Findings show that girls aged four years and above or younger and senior women aged 85 years and above are at more risk compared to other girls and women of failing in low-income. In 2016, 18.9% of girls from birth to 4 years and 24.5% of women aged 85 and above were in low income. However, it is essential to note that government transfers had the highest effects with regard to reducing low-income rates among seniors. The low-income rates for women aged between 65 and 69 years old would have been 48.8% without government transfers compared to 12.7% with government transfers. For women aged 85 years and above, the low-income rate would have been 67.4% without government transfers compared to 24.5% with the benefits of transfers.

The low-income rate trends by age group were similar for both women and girls and men and boys with slight exceptions among seniors. However, the differences in low-income rates were only significant for the age groups of 0 to 4 and 5 to 9 before and after transfers, and the age groups of 20 to 24 without transfers. Nonetheless, it is essential to note that the low-income rates for the outlined age groups were higher among women and girls compared to men and boys. However, Drolet and Mumford (2012) found that the wage gap between men and women was more significant for older women and increased among older age groups.

Table 4: Low-Income rates by Sex and Age-group, with and without transfer, 2016

	Female		Male
	With transfer	Without transfer	With transfer	Without transfer
	Percent
0 to 4 years	18.9	35.2	16.6*	32.8*
5 to 9 years	13.2	31.0	12.8*	27.8*
10 to 14 years	12.9	27.0	11.9	26.5
15 to 19 years	13.9	25.7	14.3	25.6
20 to 24 years	15.9	24.0	11.5	18.0*
25 to 29 years	13.0	20.9	9.8	17.5
30 to 34 years	11.7	21.9	11.4	19.7
35 to 39 years	12.5	23.3	10.8	20.7
40 to 44 years	12.0	22.2	10.1	19.4
45 to 49 years	11.5	21.3	10.4	18.9
50 to 54 years	11.5	17.0	12.1	19.5
55 to 59 years	11.6	21.9	14.1	20.8
60 to 64 years	16.7	31.8	14.0	24.8
65 to 69 years	12.7	48.8	13.5	39.8
70 to 74 years	15.3	58.7	11.1	49.6
75 to 79 years	16.1	59.7	12.1	58.6
80 to 84 years	20.0	66.7	9.3	59.9

Source: Statistics Canada, Canadian Income Survey, 2016

The Effects of Specific Transfer Programs on Low-income Levels from 2000 to 2016

This section offers an analysis of all transfer programs, including OAS, GIS, CPP, QPP, EI, WITB, GST, and HST. HST and GST had the highest number of recipients for women in 2016, followed by QPP/CPP benefits, then child benefits, followed by GIS/OAS, social assistance, Employment Insurance, and the WITB, respectively. On the other hand, QPP/CPP, and HST/GST benefits had the highest recipients for men followed by GIS/OAS, Employment Insurance, child benefits, WITB, and social assistance, respectively. It is important to note that there were more female recipients for government transfers than male recipients for all transfer except Employment Insurance and WITB. Twice as many women as men were recipients of social assistance and four times as many women were recipients of child benefits.

These programs also had different effects on low-income levels. GIS/OAS and QPP/CPP benefits had the most significant effects concerning the reduction of low-income rates for women. These were followed by child benefits, social assistance, and Employment Insurance, respectively. The HST/GST and WITB benefits had marginal effects. Nonetheless, it is essential to note that the total income from social assistance and Employment Insurance fell after the 1990s resulting in the decline of average benefits rates from these programs. As a result, Heisz and Murphy (2016) pointed out that social assistance became less effective after the 1990s, and the income from child benefits increased over time and eventually became the most effective program over time.

Guaranteed Income Supplement (GIS) and Old Age Security (OAS) and the Quebec Pension Plan (QPP) and Canada Pension Plan (CPP)

The Old Age Security (OAS), Canada Pension Plan (CPP), and the Quebec Pension Plan (QPP) form the basis of the public retirement income system in Canada. The OAS system offers a base income for seniors aged 65 years and above, while the GIS offers additional benefits to low-income OAS recipients, the QPP and CPP are the retirement pensions that require individuals to contribute to during their working years. CPP includes survivors’ benefits and disability pension for individuals.

Effects of GIS/OAS and QPP/CPP on Low-Income rates of Seniors

The GIS/OAS and QPP/CPP programs played a significant role in reducing low-income levels among seniors. These programs reduced the low-income rates of unattached senior women from 75.6% to 34.3% and from 69.9% to 32.5% for unattached senior men. However, these programs have become less effective in reducing the rates of low-income among seniors over time. This is more evident in senior women as in 2000, the GIS/OAS and QPP/CPP reduced low-income rates for elderly unattached women from 80.5% to 19.5% (61%) compared to 2016 where it reduced low-income rates from 75.6% to 34.3% (by 41.3%). The rates of low-income steadily increased during the 2000 to 2016 period for elderly unattached women from 19.5% in 2000 to 34.3% in 2016. These trends are similar for elderly unattached men, although not so big. The low-income rates for elderly unattached men were found to be statistically significantly lower than that of unattached elderly women in most years. However, the difference was not statistically significant, especially during the 2013 to 2016 period.

	Unattached Female		Unattached Male
	With Transfer	Without transfer	With transfer	Without transfer
	Percent
2000	19.5	80.5	14.6*	71.1*
2001	20.7	78.5	15.3*	66.8*
2002	23.0	77.9	16.9*	68.7*
2003	21.6	78.3	16.9*	68.3*
2004	21.9	77.7	15.7*	67.2*
2005	28.0	79.3	17.0*	64.8*
2006	26.5	77.5	21.4	65.6*
2007	28.6	76.0	21.9*	67.1*
2008	33.2	77.8	20.2*	58.6*
2009	31.2	73.7	21.3*	59.0*
2010	32.4	74.5	20.7*	56.2*
2011	33.8	76.0	23.9*	63.8*
2012	30.6	76.3	23.4*	65.7*
2013	28.7	73.2	25.0	64.3*
2014	30.0	72.7	26.3	62.7*
2015	33.0	74.5	29.8	66.6*
2016	34.3	75.6	32.5	69.9

Other studies support these findings such that low-income level is higher among women, much higher among single women and increases with age. The effects of transfers on senior people are pronounced in developed countries (Smeeding, 2003). Similarly, the Longitudinal Administrative Databank of 2012 pointed out that coupled who received CPP aged 70-79, 5% were in low income based on the calculations of the LICO, and 10% would have been in low-income without CPP. The report by the Employment and Social Development Canada (2017) noted that single seniors aged 70 to 79 had a low-income rate of 31%, and the rate would have been 52% without CPP.

Effects of GIS/OAS and QPP/CPP on Low-income Rates of Couple Seniors

Retirement transfers reduced the rate of low-income among elderly couples from 51.6% to 8.3% in 2016. However, the rate of low-income for this group increased slightly from 2000 to 2016, and the effectiveness of government transfers reduced over this period. Nonetheless, it is important to note that these trends were not as significant as those witnessed with unattached elderly men and women. The rate of low-income for senior couples with and without transfers was found to be statistically lower than that of unattached senior women in all years by a big difference.

	Senior Couples
	With Transfer	Without transfer

2000	2.9	62.7
2001	3.6	61.2
2002	4.6	58.5
2003	4.5	60.4
2004	4.0	58.4
2005	5.3	58.1
2006	5.4	56.8
2007	6.1	54.9
2008	6.3	56.7
2009	7.4	55.1
2010	7.6	57.3
2011	8.7	56.3
2012	6.7	52.3
2013	6.2	54.6
2014	7.2	52.4
2015	8.7	52.1
2016	8.3	51.6

Chapter Five

Conclusion

This paper analyzed the effects of government welfare programs on the rates of low-income among men and women. The paper utilized a simple approach in the analysis of the effect of government transfers on low-income rates. Even though the method does not incorporate behavioral changes, it offers good approximations of the effect of government transfers on low-income. Some of the key findings of the present paper include:

Welfare programs (government transfers) had a significant effect in reducing the rates of and magnitude of low income in both men and women.
GIS/OAS and QPP/CPP were the most effective programs and had the most substantial effect in reducing the rates of low-income
Females had the highest rates of low-income, together with unattached elderly women, and government programs had significant effects on these groups.
The rates of low-income increased among elderly unattached women, and government transfers such as GIS/OAS and QPP/CPP became less effective with time.

Future studies could utilize administrative data and longitudinal surveys to follow the same individuals over time. This would allow for an analysis of how individuals and families adjust their behavior according to the transfers they receive, and how transfers in one year can impact low income in subsequent years. Future research that focuses on individual women and men, their relationships and living arrangements, and their incomes and resource sharing could also give additional insight into gender and low income. An analysis with larger data sets, such as the Canadian Census, could also permit disaggregation into more detailed sub-groups.

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The Impact of Social Welfare Policies on Low-Income Levels

Abstract